Do you sometimes have to use your own personal mobile phone for work related reasons? If you do, you might be eligible to claim some of its use as a tax deduction.
But how much are you supposed to claim as a tax deduction for the business use of your phone? How are you supposed to prove it? And what qualifies your phone as “business use”?
We know it can be confusing to try and work out how to claim a deduction for something that is used both personally, and for business. But don’t worry, because in this article we will walk you through all the things you should know so that you can claim the most you can with your mobile phone use for this year’s Tax Return.
What is a tax deduction?
A tax deduction is something that you have paid for out of your own pocket, for a work related reason. When you claim a tax deduction, it helps lower your taxable income. If you lower your taxable income, you don’t have to pay as much tax which means you can spend more money on the things you love. The best way to do this is by lodging your tax return online with a professional tax agent.
When it comes down to it, there are three main criteria that qualifies an expense for tax deduction:
- You must have spent the money and not have been reimbursed
- It must be related to your job
- You must have a record to prove it
What is your taxable income?
Your taxable income is money generated from your employer or your work. Your taxable income also includes:
- PAYG summaries
- Pensions and government allowances
- Interest earned (banks etc)
- Dividends
- Rental property income
- Business income
- Other income earned (capital gains etc)
What are common types of work-related mobile phone expenses you can claim on your tax return?
We all know that smartphones can do a whole heap of things that can help you with your work, outside of just calling people. When you use your phone for all of these other business uses, it is tax deductible. Such uses include:
- Tracking
- Phone calls
- Video calls
- SMS text messaging
- Online research
- Software testing
- Logging into systems
- Taking photos
- Social media
How do you calculate your work-related mobile phone expenses for tax deductions?
If you are wondering how to claim a mobile phone on tax, you will need to be familiar with the three ways the ATO recommends you do it. What are the different ways to claim mobile phone expenses? The different methods include:
1. Claim from my phone bill
The first way to calculate your tax deduction for your phone use is to calculate the percentage of your business-to-personal use and deduct that percentage on your phone bill. You will need to:
- Record the number of work calls you make, and the time spent on the calls over 4 weeks.
- Record the amount of data you use for work purposes over 4 weeks.
So if you have a $60 per month plan with unlimited calls and 60GB of data, and you spend 30% of your calls and data for work, you can claim $18 per month as a tax deduction. If you want to be sure you are claiming your phone tax deduction right, you should book a meeting with a tax professional.
2. Only claiming a few work calls and texts
Not everyone will need to use their phone for work all the time. If you happen to use your own phone for work on the rare occasion, and your claim is less than $50, you can elect to claim those calls and texts at the nominal rate:
- $0.75 for work calls you make from your mobile.
- $0.10 for work texts sent from your mobile.
If your claim is going to be over $50, the best thing for you to do is use method 1, and record your phone use over 4 weeks.
3. Claim internet on tax return with your phone
You may be wondering, “how much internet can I claim on tax?” If you have a phone and internet bundle, your internet tax deduction will be calculated the same as the method 1 mobile phone tax deduction. You need to work out your percentage of business use over 4 weeks for both your internet and mobile phone, and offset that percentage against your bill.
If you share the house and internet with someone else, you also need to calculate your use against theirs, and not take your percentage against the total if that is the case.
There is always the option to book a meeting to see a professional that will help you with your tax return. Meetings are free when you lodge with a professional online tax agent like One Click Life.
Does this include the cost of buying your mobile phone?
If you buy your phone outright you can claim part of the purchase as a tax deduction. If the phone was less than $300, you can claim the expense as a once-off deduction. However, if the purchase was more than $300, you must claim the depreciation expense over two years as a deduction.
To calculate depreciation expenses can be a simple thing to do but if you need help, you should book a free meeting to discuss with a professional tax agent.
Need help claiming your work-related phone expenses?
The more you deduct, the less tax you pay and the more money you can spend on yourself. We are with you every step of the way, so you don’t have to face the ATO alone. Talk to our friendly, trusted tax accountants about which tax deductibles you can claim and boost your tax refund, stress-free.
You can also claim your tax agent/tax return fee back on tax, so why wouldn’t you use one to minimise your tax and maximise your money?
One Click Life fast offers online tax returns at your fingertips in an easy-to-use platform run by industry professionals.
Taxes, health insurance, and Wills can be time-consuming and tedious. Our app allows you to be able to do this fuss-free, giving you a simple way to organise, track and manage all of your Life Admin in one place.
Let One Click Life take care of your Tax Return and life’s essential tasks so you can spend more time doing the things you love.